The S&P 500 futures are down 64 points (1.2% below fair value), Nasdaq 100 futures are down 348 points (1.7% below fair value), and Dow Jones Industrial Average futures are down 311 points (0.8% below fair value).
Early trading continues yesterday's selling due to growth concerns from disappointing data. More crucial data, the July Employment Situation Report, is expected at 8:30 ET.
Global markets are also affected by growth worries. Japanese stocks had their biggest drop since 2020, with the Nikkei falling 5.8% below its 200-day moving average. Major European indices are also set to end the week lower.
The early U.S. market weakness is linked to mega caps reacting to earnings from Amazon (AMZN, Financial) and Apple (AAPL, Financial), and semiconductor shares reacting to Intel's (INTC) earnings. AMZN is down nearly 10%, and INTC shows a more than 20% decline.
In corporate news:
- Apple (AAPL, Financial): Beats by $0.06, beats on revenue; Q4 outlook: expects revenue growth similar to Q3, double-digit services growth, gross margin of 45.5-46.5%, and 1.5% F/X headwind.
- Amazon (AMZN, Financial): Beats by $0.23, reports in-line revenue, beats on operating income; Q3 revenue guidance in-line; bullish on AI's long-term impact.
- Intel (INTC): Misses by $0.08, reports in-line revenue; Q3 EPS and revenue guidance below consensus; suspending dividend from 4Q24, announces cost reduction plan.
- DoorDash (DASH): Reports Q2 results, beats on revenue; Q2 adjusted EBITDA above guidance, provides Q3 guidance.
- Block (SQ, Financial): Beats by $0.09, misses on revenue.
- Atlassian (TEAM): Beats by $0.08, reports in-line revenue; Q1 revenue guidance below consensus.
- Snap (SNAP): Beats by $0.01, misses on revenue; Q3 revenue guidance in-line.
- Booking Holdings (BKNG): Beats by $3.27, beats on revenue; travel market normalizing, Q3 room night growth impacted by booking window.
- Clorox (CLX, Financial): Beats by $0.27, misses on revenue; FY25 EPS guidance above consensus, revenue below consensus.
- U.S. Steel (X): Beats by $0.08, beats on revenue; progressing on U.S. regulatory processes for Nippon Steel transaction.
- Exxon Mobil (XOM, Financial): Beats by $0.12, beats on revenue.
- Chevron (CVX, Financial): Misses by $0.38, beats on revenue; moving headquarters to Houston, Texas, announces senior leadership changes.
Reviewing overnight developments:
Today's News
The U.S. Department of Justice has initiated an investigation into Nvidia (NVDA, Financial) following complaints from competitors alleging the company abused its market dominance in selling AI chips. The probe includes reaching out to rivals like Advanced Micro Devices (AMD, Financial) and various AI chip startups. Allegations suggest Nvidia may have pressured customers to buy multiple products and threatened to punish those who also purchased from competitors. Nvidia holds approximately 80% of the AI chip market.
Apple (AAPL, Financial) is reportedly pushing major Chinese app developers, including Tencent (TCEHY) and ByteDance, to cease allowing in-app creators to accept payments outside of its App Store ecosystem. Apple has threatened to reject essential updates for apps like WeChat unless these developers comply. The company's 30% commission on App Store purchases has been under scrutiny globally, leading to legal challenges in multiple regions.
Amazon (AMZN, Financial) saw an 8.4% drop in premarket trade following underwhelming earnings results. The e-commerce giant’s disappointing performance has raised concerns about the broader tech sector, contributing to a risk-off sentiment in the market. Analysts are closely watching how Amazon will navigate through these challenging times.
Chevron (CVX, Financial) reported Q2 earnings that fell short of Wall Street estimates, primarily due to lower refining margins and natural gas prices. The company also announced plans to relocate its corporate headquarters to Houston, Texas. Despite these setbacks, Chevron's revenues rose 4.7% year-over-year to $51.18 billion, and U.S. production saw a significant increase due to the successful integration of the PDC acquisition.
Apple (AAPL, Financial) also received praise from Wall Street for its quarterly results and future outlook, particularly regarding its AI strategy. Analysts believe the integration of AI technology into the Apple ecosystem could add $30 to $40 per share. The company plans to roll out these AI features, including ChatGPT integration, by the end of the year.
Arbor Realty Trust (ABR, Financial) declared a $0.43 per share quarterly dividend, maintaining its forward yield at 13.03%. Despite missing revenue targets, the company’s earnings per share beat estimates. Arbor Realty Trust has been facing challenges, including a federal probe and short-seller attacks, but continues to offer attractive dividend yields.
Exxon Mobil (XOM, Financial) posted strong Q2 results with net income jumping to $9.24 billion and revenues rising 12% year-over-year to $93.06 billion. The company credited its performance to record production in the Permian Basin and Guyana, as well as the successful integration of the Pioneer merger. Exxon also declared a $0.95 per share quarterly dividend.
Block (SQ, Financial) shares rose over 6% after the company raised its full-year outlook and reported Q2 results that surpassed estimates. The company now predicts an adjusted EBITDA of $2.9 billion, exceeding previous estimates. Block also accelerated its Rule of 40 target, showing strong growth potential.
Clorox (CLX, Financial) and Iron Mountain (IRM, Financial) announced dividend increases, adding to the list of companies rewarding their shareholders. Clorox increased its dividend by 1.7% to $1.22 per share, while Iron Mountain raised its dividend by 10% to $0.715 per share. These moves reflect the companies' commitment to returning value to shareholders.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.B) sold another 19.2 million shares of Bank of America (BAC, Financial) for about $779 million. This brings the total value of shares sold since mid-July to over $3.8 billion. Despite the sales, Berkshire Hathaway remains the largest shareholder of the bank, holding approximately 942 million shares.
Enbridge (ENB, Financial) reported Q2 adjusted EBITDA of C$4.3 billion, an 8% increase year-over-year. The company also updated its full-year financial outlook to include contributions from recent U.S. Gas Utilities acquisitions. Enbridge continues to show strong financial performance and strategic growth initiatives.
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